Unlocking the Secrets of Elliott Wave Theory in Trading

Table of Contents:

1. Introduction
2. Analysis of Etsy Stock
3. Analysis of Chewy Stock
4. Conclusion
5. FAQs

Introduction:

In this article, we will analyze two stocks – Etsy and Chewy – that experienced a decline after Amazon's lackluster earnings report. Despite the recent dip, we believe both stocks are promising long-term investments with the potential for a significant rally in the coming months. We will delve into the technical analysis of each stock, examining price patterns and identifying potential entry points for investors. So, without further ado, let's get started!

Analysis of Etsy Stock

At all-time highs, Etsy exhibited a cycle wave one, followed by a downtrend to a cycle wave two bottom. By observing the seven swing structure, we can confirm this bottom at the 100% extension of wave y off wave x. This provides evidence that Etsy has bottomed, and we are not in a deeper complex correction. The recent drop in price is the wave c of the wave two, indicating that we are likely close to the wave two bottom. The projected range for this bottom is between $184.59 and the 1.618 extension of $173. However, it is anticipated that a bounce will occur at the uptrend line, which has been respected since the breakout of a symmetrical triangle in early June. Despite a potential short-term pullback, Etsy is expected to reach the mid-200s by late August or early September, making it an attractive long-term hold.

Analysis of Chewy Stock

Similar to Etsy, Chewy also experienced a wave one at all-time highs, followed by a WXY correction that brought the stock down for a wave two. Currently, Chewy is in an uptrend, with a five-wave impulse up for a wave one. After a pullback for a wave two, the stock is now in a wave one, two, one, two nest. This indicates that the primary wave two bottom has been found, and we are currently in an intermediate wave two. Previous analysis had identified Chewy as a favorable dip buy stock due to its 1-2-1-2 nest structure. After finding support around the 100 mark, Chewy is currently undergoing a wave c decline, with a projected bottom range of $82.29 to $77.55. Following this bottom, a significant rally is expected, potentially taking Chewy to the $105, $107, or $108 range. All dips should be seen as buying opportunities, with a favorable entry point closer to $78.

Conclusion

Etsy and Chewy, despite experiencing a decline after Amazon's lackluster earnings, show promise as long-term investments. Both stocks have strong technical indicators and are expected to rally in the coming months. Etsy's uptrend line and projected bottom range make it an attractive buy, with a potential move to the mid-200s. Chewy's dip buy opportunity, coupled with its projected price target of around $105 to $108, presents an enticing investment option. Investors should closely monitor these stocks and consider taking advantage of the current dip to secure profitable positions.

FAQs

Q: Should I invest in Etsy and Chewy? A: Both Etsy and Chewy show potential for future growth. However, it is essential to conduct thorough research and consider your investment goals before making any investment decisions.

Q: What is the projected timeline for the rally in these stocks? A: The rally in Etsy is anticipated to occur by late August or early September, while Chewy's rally is expected to happen in the near future.

Q: What factors should I consider before investing in these stocks? A: Factors to consider include the overall market conditions, the company's financial health, industry trends, and any upcoming catalysts that may impact the stock's performance.

Q: What is a dip buy strategy, and why is it relevant to Chewy? A: A dip buy strategy involves buying stocks during price declines, taking advantage of short-term market fluctuations. Chewy's 1-2-1-2 nest structure makes it an attractive opportunity for dip buyers, as it provides a favorable entry point.

Q: Are there any risks associated with investing in these stocks? A: Like any investment, there are risks involved. Factors such as market volatility, competition, and unforeseen events can impact stock performance. It is important to diversify your portfolio and consult with a financial advisor for personalized advice.